Overview of Business Unit in Oracle Fusion Applications

Objective:

The purpose of this document is to make the reader understand about the concept of Business Unit and points which needs to be accounted for before creating the same.

Business Unit:

A business unit (BU) of an organization/enterprise is a unit which performs all such business transactions that are defined by the management. This of course should match with the objective of the organization. A business unit can process transactions on behalf of a legal entity which would finally be rolled up in a management hierarchy provided the Chart of account is designed accordingly. So we are required to assign the business units to one primary ledger. Usually a BU would have a manager, strategic objectives, a level of autonomy, and responsibility for its profit and loss.

A business function represents a business process, or an activity that can be performed by people working within a business unit and describes how a business unit is used. The following business functions exist in Oracle Fusion applications:

• Billing and revenue management

• Collections management

• Customer contract management

• Customer payments

• Expense management

• Incentive compensation

• Marketing

• Materials management

• Inventory management

• Order fulfillment orchestration

• Payables invoicing

• Payables payments

• Procurement

• Procurement contract management

• Project accounting

• Receiving

• Requisitioning

• Sales

A business unit can perform many business functions in Oracle Fusion Applications. Prior to Oracle Fusion Applications, operating units in Oracle E-Business Suite were assumed to perform all business functions, while in PeopleSoft, each business unit had one specific business function. Oracle Fusion Applications blends these two models and allows defining business units with one or many business functions. In Oracle Fusion, business unit can be used in processing any transaction, reporting and data security.

Creating Business Unit:

While creating business unit we must specify the level at which it is to be created. Business units in an enterprise may be represented at the business function level, such as Sales, Consulting, Product Development, etc. We can create business units at following levels-

•  Country

•  Country and Division

•  Country and business function

•   Division

•   Division and legal entity

•   Division and business function

•   Business function

•   Legal entity

•   Business function and legal entity

How to select Business Unit Levels?

Let’s discuss an example of a company Apps2Fusion Corporation which has two divisions, one for Vision Care, and another for Surgicals. They operate in four countries: US, UK, Japan, and India, and they have created a legal entity for each of the countries. Sales and marketing functions are based in both India and Japan, while the US and the UK have only the sales function. Please refer to below chart which illustrates Apps2Fusion Corporation's enterprise structure-

Below are the listed options for business unit levels and the resulting business units that the application suggests for Apps2Fusion Corporation-

Anjan Mukerji

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